Paul Blackburne

From backpacker to business mogul

Paul Blackburne on lessons learned from building a property empire

Written by Emma Mason AIMM
9 minute read
Paul Blackburne

Founder, Owner and Managing Director of property developer Blackburne Group Paul Blackburne

Building any business to become a multi-million dollar industry leading empire requires a great deal of calculated risk, integrity and resilience. Yet it is still a feat not many will be able to achieve in their lifetime.

For Founder, Owner and Managing Director of property developer Blackburne Group Paul Blackburne, these traits have been instrumental in his journey to success, which he spoke about at the latest AIM WA Inspirational Leaders Series breakfast.

Early ambitions and global exploration

A fellow member of the WA community, Paul grew up in Gooseberry Hill and spent his formative years at Guildford Grammar.

After studying for a Bachelor of Commerce, he worked in Perth for a few years before leaving to work and travel the world. Five years later, Paul had lived, worked and travelled across multiple countries within Asia, the Middle East, North America and Europe.

During his travels, one visit to Cambodia left Paul heavily impacted by the war-ravaged conditions. This inspired him to later co-found The Child Protection Unit in 2013, an organisation that works to combat child abuse and exploitation.

“I always thought in my 20s that I'd be a leader or manager and I thought it would be a not-for-profit organisation or NGO working in third-world countries,” he said.

“So far most of my work has been in the commercial world starting and running a business, however, it’s great to know we are creating generational wealth that can hopefully help play a role in making the world a better place.

“Even better is knowing that we are providing truly transformative new developments that add value to people’s lives.”

Once returning to Perth in 2003, Paul borrowed $600,000 from NAB to buy part of the rent roll from his father John’s firm - Blackburne & Joyce Real Estate.

He shared how he never expected to return to Perth, let alone work in property. Yet after falling in love with the industry and the idea of staying in Perth, he ended up staying and starting a property business.

By 2007, Blackburne Real Estate had morphed into Blackburne Group and is now one of the largest residential and commercial developers in Australia, dominating the luxury apartment sector mostly in WA.

With the company settling more than $1 billion in property in the past 15 months alone and boasting multiple large-scale projects including One Subiaco, The Grove Residences and West Village Karrinyup, Paul reflected on the importance of taking calculated risks.

“Having a philosophy of making choices based on logic and reason rather than ego or emotion has really helped,” he expressed.

“I tend to think in a very mathematical, logical way by constantly weighing up the percentage chances or odds of certain outcomes happening. This has helped me make logical and informed decisions both personally and in business.

“Whilst they certainly aren’t all the right choices, this mathematical way of making decisions has generally led to great outcomes for myself and the business.”

Learning how to live off very little

Paul shared that having the discipline to live off minimal resources, a skill honed during his backpacking days, was a key component that contributed to his success in growing Blackburne.

“Budget travel is very similar to running a business by learning how to get a lot from very little. Travelling in mostly developing countries over long periods on $20-50 a day also helps improve your communication skills,” he said.

This mindset of frugality stuck with Paul, helping him to remain financially disciplined and maximise his resources during the company's formative years.

“If you’re going to start a business then you’ve got to have [the mindset] of living off very little for at least five years,” he said.

“The first five years or so, I had a $5000 Commodore and lived in a little old apartment in Subiaco. The business was starting to generate profits and I had to have that discipline to reinvest profits back into the business and spend very little on myself.

“... If your primary aim is to make money then I think you can get blinded by that … having travelled and lived off very little for a long period of time, you tend to learn that your source of strength and happiness comes mostly from other things apart from money.”

Paul also encouraged prioritising long-term growth over short-term gratification, citing an example of falling into the trap of buying depreciating assets early on in life.

“I've seen new small business owners that are 30-35 years old driving $200,000- $400,000 sportscars. As its money not reinvested in growth, that’s half their future profit they just lost and they still only get from A to B,” he said.

The birth of Blackburne Group

During the early stages of Blackburne, Paul gained valuable insights into the shortcomings of the industry, noticing a gap in the market for high-quality apartment complexes.

Choosing to focus on quality over profits, he said he advocated for a customer-centric approach that would prioritise the customer and maintain brand integrity.

“… It means understanding and focusing on the client and what they wanted was larger higher-end apartments which are very rare in Australia. There was generally a very low quality being developed in Australia and especially in Perth,” he emphasised.

Since the company was initially not a developer, Paul focused on sales, selling numerous apartments to generate cash flow. Initially set up as a property development consultant, Blackburne’s services centred around design, sales, and marketing.

Within five years, many of Australia’s leading property developers partnered with Blackburne to deliver thousands of new properties across Australia.

In the beginning, Paul opted to handle the sales himself to save paying out so much to sales agents, which helped him to acquire the equity needed to do his own small developments.

He then transformed the company from a development manager and project marketing agency to a true property developer that uses its own equity to undertake developments.

“In the early days, I decided to sell myself and get two or three assistants who would just sign the contracts, which proved more cost-effective. However, it meant I was working seven days a week, 12 hours a day,” he said.

This demanding approach paid off, however, when the 2007-2008 global financial crisis hit and many developers struggled to get projects off the ground.

With a lack of competition, Paul noted how he used the company profits generated from real estate and consultancy to secure his first development site. While it was a risk, this development went well, and since then earnings have been reinvested in larger new developments.

Not using other people's money

When Blackburne started developments, Paul made a conscious decision to only do developments where he and his company could provide their own equity, rather than what most developers do which is a syndicate or rely on others for the equity.

“The only time we have used external capital to partly fund a project is when we have agreed to a joint venture with a landowner who doesn’t want to sell yet wants to keep their land in the project as equity,” he shared.

“I’ve only realised in the last year or two that almost every developer in Australia mostly relies on external equity or a very high level of leverage to financed projects. This model means that the ‘developer’ is more of a development manager and most of the project profit essentially goes to the company or person financing the project.

“My initial philosophy has been to just do what you can do with your own equity and only have three to five projects on at once. It means less ‘deal pressure’ and less turnover, yet higher margins as the providers of equity financing aren’t getting all the returns.

“Often developers end up with a very small margin on their fees and little else unless they provide a large portion of the financing. Many often make nothing after decades of work when they rely on very expensive external equity or highly leveraged debt.”

Surviving downturns and navigating risk

If you’re not experienced and don’t have a lot of financial strength, the property development industry can carry significant risk, given the very technical nature of each step, potentially high levels of market fluctuations and unpredictability.

Taking advice from his father, Paul maintained the business's property management component. He emphasised how in the early days this strategic foresight provided stability for the company during economic downturns and any potential risks.

“It makes you act differently in the boom because you say to yourself ‘I know I can take some risk, if it doesn't work out, we're not going to have to shut the doors and lay everybody off, when the boom comes back again, we don’t have to rehire everybody’,” he added.

“We just keep going and ride out any changes in the cycle to emerge stronger at the end.”

When discussing the current market, Paul predicts upcoming challenges for builders and developers who are overly reliant on expensive high debt levels or external equity funding.

“I think [in] the next two years, we're going to see a lot of developers withdraw from the market or sell sites as the margins are not there to support paying for external equity or high levels of debt,” he said.

“Builders you’re already seeing go under due to a very rare period of extreme price rises. Developers generally have most sold before you start and have fixed price contracts with buyers, so this also needs a fixed price contract with the builder.

“Unfortunately, this means some builders have made very little in the past few years, however, most of the end buyers have made substantial gains from buying off the plans.”

He advised how it wasn’t sustainable to use other people's money in volatile markets and cited its contribution to the current shortage of apartments.

“... With rates doubling and building prices up … it's just not viable to proceed with new developments if there is external equity being used, as once this higher risk equity or debt is paid off then there is often little, or no profit left for the developer,” Paul said.

Lessons in leadership

Paul Blackburne's journey from working multiple odd jobs and backpacking the world, to becoming the driving force behind one of Australia’s most successful property development firms demonstrates the value of calculated risk-taking, unwavering integrity and resilience in building an industry leading multi-million dollar empire.

In his approach to team building, he encourages investing in employees based on a cultural fit, rather than just experience.

“Someone who doesn't have any experience or limited experience in the area that comes in with the right attitude, that turns up each day and just wants to learn can often be a lot more effective than someone with 10-20 years’ experience,” Paul said.

“I think most CEOs would agree with this.”

For entrepreneurs or those looking to start their own businesses, Paul emphasised that having a supportive network is vital.

“... If you have people around you outside of work that don't make you feel good, spend less time with them and surround yourself with those that do make you feel better,” he said.

“Most of your success in life happens by ensuring you surround yourself both personally and professionally with the right people that believe in you and support you.”

He further advised young people to explore entrepreneurship and travel before they had other responsibilities later in life.

“... I think if people go straight from school to university and into a big company, it becomes all about the dollars as they have never seen the world or had a wide range of experiences to open their eyes,” Paul shared.

“[While] it’s not necessarily a bad thing, it can make it harder to take an entrepreneurial risk because they're just so afraid of losing money as that’s all they know.”

Paul’s commitment to remaining disciplined and true to his core values is a testament to his ability to successfully navigate an often challenging industry.

Yet despite his achievements, Paul remains humble, recognising that true success goes beyond monetary gain – an admirable quality that sets him apart as a modern leader.